By Erick Morales. “It is the right time for Mexican investment managers to implement GIPS”
Erick Morales, the Senior Financial Risk Manager at KPMG Mexico, talked to Funds Society about the benefits of the Global Investment Performance Standards (GIPS), as well as his vision for the Latin American market and why now is the right time to adopt the standards in Mexico.
Morales will be giving a seminar on GIPS, organized by Riskmathics, at the Sheraton Maria Isabel de la Ciudad de Mexico Hotel on June 13. He stated that the benefits of the implementation would include “continued transparency of client information regarding yields, and maintaining a uniform structure of strategy presentation amongst investment managers”.
The director mentioned that in the more mature countries, after more than 15 years of global implementation of GIPS, “investors themselves avoid entrusting managers without the standard”. Furthermore, he said that he hoped the Latin American region would follow the same line, because reliance on the CFA Institute endorsed standards can give investment managers a competitive edge.
As for the Mexican repercussions of the FATCA initiative of the United States IRS, Morales said that it would not affect the majority of investment managers complying with the national regulations and seeking to adopt GIPS, “because the Mexican entities’ efforts to comply with the regulations have been good.” He further stated, “The GIPS standards even allow foreign investors to seek alternative options in the region and to become more transparent with regard to other regulations”.
Morales believes this is the right time to adhere to the standards, taking advantage of the fact that the adjustments required – to comply with new regulations like the ones concerning sales practices or investment services – are oriented towards the same goal.
Finally, Morales emphasized that the GIPS seminar organized by Riskmathics will help institutions seeking to apply the standards to understand their foundations, to create portfolios and compliance presentations, including the methods required for yield calculation.
For more information or to register for the seminar, click here.
Pershing LLC, a BNY Mellon company, today unveiled its new Practice Management Center, a comprehensive resource that offers Pershing’s clients practice management-related content in one user-friendly, central location. In response to client demand, advisors will now have quick access to all of Pershing’s family of practice management materials, including more than 100 pieces of thought leadership, whitepapers, guidebooks and interactive tools on-demand.
“The goal of the Practice Management Center is to give advisors a resource that answers their most pressing practice management questions,” said Maureen Duff, head of global marketing at Pershing. “Through the Practice Management Center, Pershing’s clients can access a broad spectrum of information, tools and research that will help them evaluate all aspects of business development, better understand regulatory mandates and grow their business.”
With the development of the Practice Management Center, advisors will now be able to efficiently research content specifically relevant to their business. All related information will be grouped within each of Pershing’s practice management pillars: growth, human capital, operational efficiency and managing risk. Each will also be assigned to a topic, helping advisors zero in on the resources that are most relevant to their situation. A sampling of content available on the site includes:
Business Development and Planning – Becoming a Stronger Wealth Manager
Recruitment and Retention – The 30% Solution: Growing Your Business by Winning and Keeping Women Advisors
Platform and Workflow – Mission Possible III: Strategies to Sustain Growth in Challenging Times
Compliance and Supervisory Guidelines – Effective Sales Supervision and Compliance
Pershing and its affiliates provide global financial business solutions to over 1,600 financial organizations, broker-dealers, registered investment advisory firms, advisors, fund managers and asset managers who represent over 5.6 million active accounts. Located in 23 offices worldwide.
After a multiyear rally, many high-yield investors are looking for new strategies to better balance risk and return. We don’t think a deep dive into riskier credits is the answer. Instead, investors should consider moving beyond traditional boundaries—both geographic and in credit rating.
Casting a Global Net for High Yield
European and Asian high-yield investors are accustomed to thinking globally for their high-yield allocations. The fact that the US high-yield market developed first and was for many years the dominant issuing region explains some of their global viewpoint. In contrast, US high-yield investors tend to stick close to home.
But in recent years Asia, Europe and emerging regions have seen their high-yield issuance expand, diversify and become more liquid. The result? US investors may benefit from looking further afield than they have in the past.
Fifteen years ago, less than 1% of the corporate high-yield market was issued outside the US. Today, as shown in the display below, US-only investors are cutting themselves off from nearly a third of the high-yield market.
But those willing to reach across borders (and able to conduct in-depth market, political and issuer research in other regions) can frequently find opportunities in developed and emerging markets with equivalent or better credit ratings than home-field issuers, higher yields, and higher potential return. What’s not to like about that?
Crossing the Investment-Grade Border
We think some of the best ideas for high-yield investors in all regions right now may be outside the traditional high-yield credit-rating zone.
The way we see it, there’s no unbreachable wall between investment-grade and high-yield securities. It’s a continuum, and in all three of the major issuing regions there are numerous BBB and split-rated issuers with yields comparable to their lower-rated cousins.
So, investors shouldn’t fence in their high-yield allocation. One option is to invest part of a longer-maturity high-yield allocation in BBB-rated and split-rated bonds, and focus intermediate- and shorter-maturity exposures in issues rated BB and lower. In our view, this may make a portfolio better able to weather a downgrade along the way. It might also allow a portfolio to benefit from a rising star, because some split-rated bonds could be headed for a passport out of the high-yield universe.
Don’t Be a Yield Hero
By diversifying across regions and selectively moving up in credit, there’s no need to pursue higher yields simply by chasing highly speculative credits. Tight markets bait investors into taking bad risks, and we’re beginning to see this occur as a stream of investors reach down into CCC-rated bonds and so-called covenant-lite bank loans. While opportunities do exist for investors who research and monitor these issuers carefully, overall we don’t think these segments compensate investors for their risks.
With so many opportunities to diversify and find strong securities globally and to reach up and find value in investment-grade bonds, we don’t think there’s any need for high-yield investors to be yield heroes.
Gershon M. Distenfeld directs all of AllianceBernstein’s investment activities regarding high-yield debt securities across dedicated and multisector fixed-income portfolios.
Wikimedia CommonsBy Mattbuck. International Families with United States Members: What Do We Do Now?
Many international families have members who live in the United States or are United States citizens by virtue of birth in the United States, which can sometimes lead to complex issues in managing assets, which requires, among other things, a good estate planning.
From this and other issues related to the subject will be talked about next Friday on June 14. Fiscal experts will host a seminar that is titled, “International Families with United States Members: What Do We Do Now?” which will become a series of meetings that the Florida International Bankers Association (FIBA) will host.
Topics Covered are:
Preferential Tax Planning;
Common Mistakes to Avoid; and
Obligations of the Financial Advisor Concerning Portfolio Investment Decisions
Steven L. Cantor, director and partner at Cantor & Webb PA, and Kathryn von Matthiessen, also partner of Cantor, speakers at the seminar will be presented by the Committee FIBA Private Banking and Wealth Management FIBA First Annual Forum.
For more information or to sign-up for the seminar click here.
Wikimedia Commons. Investment Firm Infund Sues Grupo Mexico CEO Germán Larrea
Infund LLP has filed a civil lawsuit in Mexico against Germán UK investment firm Infund LLP has filed a civil lawsuit in Mexico against Germán Larrea Mota Velasco ,CEO and controlling shareholder of Grupo Mexico, SAB de CV claiming breach of Infund’s 2003 subscription for approximately 65 million shares of GMexico equity. The action, filed in Mexico City, alleges breach of contract.
“Without Infund’s subscription and payment through its commission agent Larrea, Grupo Mexico’s capital raise would have failed”
Upon filing the suit in Mexico City, a district court ruled to freeze the disputed securities, restricting, among other things, transfer and voting of the shares while the claims are litigated. The disputed shares which have been the subject of numerous stock splits and dividends, have ballooned in value to in excess of US $2 billion and now account for approximately seven percent of GMexico’s outstanding equity. Larrea and his family have a 51 percent controlling stake in GMexico, the giant Mexican mining and railroad conglomerate that operates railroads and mines throughout Mexico as well as Texas and Arizona through its subsidiaries ASARCO and Texas Pacifico Transportation, among others.
At issue in the suit is Infund’s approximately US $75 million subscription for GMexico shares, which Infund alleges Larrea failed to deliver. The cornerstone of a crucial US $230 million capital raise that sought to alleviate GMexico’s 2003 liquidity crunch, Infund’s “commission agreement” mandated a US $75 million advance by Infund to Larrea and a simultaneous underwriting by Larrea to Infund of approximately 65 million GMexico Series B Coupon 5 shares. Infund, managed at the time by Hector Garcia Quevedo Topete, long-time confidant to Larrea family patriarch Jorge Larrea, funded the US $75 million as required. However, the younger Larrea is alleged to have misappropriated the shares to his accounts, where they are believed to remain despite Infund’s repeated attempts to settle the trade.
“Without Infund’s subscription and payment through its commission agent Larrea, Grupo Mexico’s capital raise would have failed,” said José Antonio Marván Lizardi, Infund’s Mexico City spokesman. “The facts are straightforward here: Infund timely fulfilled its US $75 million funding obligation as part of Grupo Mexico’s vital capital raise, but never received the shares that were paid for – it’s time for this trade to be settled,” explained Marván. Counsel in the Mexican action is Rios-Ferrer, Guillén-Llarena, Treviño y Rivera, S.C., a Mexico City law firm.
Wikimedia CommonsCarolina Montiel, Head Investment Strategy Group at EFG Capital International. Carolina Montiel to Head the New Investment Strategy Department at EFG in Miami
EFG Capital International has appointed Carolina Montiel to create and direct the company’s new department of Investment Strategy in Miami. Montiel’s role includes investment advice and delivery of investment products, amongst other responsibilities, she told Funds Society.
Montiel, a professional from HSBC with over 20 years of experience, worked at the private banking Investment Department of the entity, up until a few weeks ago. In this role she built up the Miami platform, including the execution desk and the investment advice desk for UHNW clients.
At HSBC, where she worked for ten years, she gave support, alongside other professionals, to a total of 70 banks with clients primarily in Latin America and with more than $20 billion in assets under management.
Montiel started her career at JP Morgan Chase in Caracas, where she worked for eleven years before moving to Miami. At JP Morgan Chase Bank Venezuela and JP Morgan Chase Valores, she acted as President and Head of Treasury, a time during which she acquired her experience in emerging markets, specifically with foreign exchange and derivatives trading, amongst other areas.
Montiel has a degree in Urban Planning from Simón Bolivar University and holds an MBA from IESA (Institute of SuperiorManagement Studies), in Caracas.
Arturo Neto also joins from HSBC
Accompanying Montiel during this new stage at EFG Capital International is Arturo Neto, also from HSBC. He worked with Montiel a little under two years during her last period at HSBC, where he was Senior Investment Advisor, offering services to 11 private bankers with clients in Latin America and Europe and assets over $1.6 billion.
Neto joins the project to implement the Advisory Services initiative in EFG. He has more than 20 years of broad experience in investments and finance, thanks to several positions he occupied in the industry, such as Analyst, Financial Consultant, Investment Portfolio Manager, University Lecturer and CIO of a Latin American multi-family office.
Neto formerly worked at Merrill Lynch, Dimension Capital Management and Accenture. He has a Masters in Finance from Florida International University, an MBA from Darden Graduate School at University of Virginia, and CFA certification.
Wikimedia CommonsPhoto: Nasa. Mexico Amends the Investment Regime for Afores
Last April, the governing bodies of the National Commission of Savings System for Retirement (CONSAR) approved amendments to the Investment Plan to which the Investment Company Specialized Retirement Funds (SIEFORES)are subject.
Because of this, and in order to establish the investment regime by which the Siefores must abide, last Tuesday the Ministry of Finance and Public Credit (SHCP) in Mexico published in the Official Journal of the Federation (DOF), the general provisions which establish the investment regime by which investment companies specialized in retirement funds must abide.
According to a statement made to Funds Society by CONSAR sources, “these modifications allow for the consolidation of international diversification opportunities and strengthen investment risk control.”
The amendments are:
To Make countries which belong to the Committee on the Global Financial System (CGFS)of the Bank for International Settlements (BIS) eligible for SIEFORE international investments, overruling the requirement to be a member of the Technical Committee of IOSCO for these purposes. According to Consar, the modification guarantees that the highest standards of regulation and supervision of international markets in which the SIEFORE are involved, are maintained.
To add “South Korea” and “Singapore” to the group of eligible countries, as these “have shown great economic dynamism, financial markets which are effectively regulated and monitored, and have a remarkable level of development which favors diversification and profitability of resources”.
The changes made to the provisions of the Investment Regime, also adjust the risk management tool which is used to monitor the volatility and risk of the investment portfolio. “Therefore, it seeks to limit the volatility of this tool, known as the Differential of the Conditional Value at Risk, so as to eliminate the factors that made it pro-cyclical, which means that investors who used it could contribute to amplify market volatility or, otherwise, in times of stability, investors could act complacent without prudently limiting the risks. In this way, the AFORES will invest more prudently, thus contributing to the security of pensioners’ resources”, concluded the Commission.
The maximum limit of 20% laid down by law for investments in international markets shall remain intact, as well as the asset classes previously permitted, which can be seen in the following table:
Wikimedia CommonsCarstens, president of the BIS Economic Cosultative Committee and the BIS Global Economy Meeting.. Agustín Carstens, New President of the BIS Economic Cosultative Committee and the BIS Global Economy Meeting
Agustín Carstens has been appointed to chair the BIS Economic Consultative Committee and the BIS Global Economy Meeting. Mario Draghi has also been appointed to chair the Group of Governors and Heads of Supervision.
Two appointments have recently been made at the Bank for International Settlements (BIS), both with effect from 1 July 2013 and for a three-year term:
The BIS Board of Directors has appointed Agustín Carstens, Governor of the Bank of Mexico, as Chairman of the Economic Consultative Committee (ECC) and the Global Economy Meeting (GEM) after consultations with members of the GEM.
The Group of Governors and Heads of Supervision (GHOS) has selected Mario Draghi, President of the European Central Bank, as its new Chair after consultations among its members.
Agustín Carstens and Mario Draghi will succeed Mervyn King, who will step down as Chairman of the three groups when he retires as Governor of the Bank of England at the end of June. Mr King has chaired the ECC, the GEM and the GHOS since November 2011.
Both the Board and the GHOS have expressed their gratitude for Mr King’s excellent chairmanship.
Wikimedia CommonsFoto: Ascent Private Capital Management. Karen McNeill, nueva jefa de Historia Familiar de Ascent Private Capital
U.S. Bank Wealth Management announced today that Karen McNeill has been appointed Head of Family History for Ascent Private Capital Management of U.S. Bank. Karen reports to Scott Winget, Senior Managing Director of Wealth Impact Planning.
“Karen is passionate about history and believes that it is important to help us understand ourselves and the world in which we live,” Winget said. “We are delighted to have such a distinguished professional join our Wealth Impact Planning team.”
In her new role, McNeill works directly with families to research and present family and business histories as part of a comprehensive wealth planning platform. As part of Ascent’s Wealth Impact Planning team, she helps families uncover and construct meaningful family histories, then delivers them in live presentations, often at family meetings or retreats.
McNeill has more than 15 years of experience in working on personal history projects with individuals, as well as with private and public sector organizations. Prior to joining Ascent, she taught history at the University of California, Berkeley, the University of the Pacific, Ohlone College, and the Academy of Art University. She has also served as senior historian/architectural historian at Carey & Co., Inc., in San Francisco, where she was a consultant for many private and highly public individuals. She has also been a consultant to Landmarks California and is a Director on the Landmark Heritage Foundation Board.
McNeill earned Ph.D., M.A., and B.A. degrees in history from the University of California, Berkeley. She has authored a variety of publications and earned a number of honors and awards, including a research fellowship from the National Endowment for the Humanities for her biography of Julia Morgan, architect for the Hearst family.
ETFs and ETPs have received record net inflows of $107 billion through the end of May 2013 which is 31% higher than the $82 billion in net flows at this time in 2012. These inflows have helped to push assets invested globally in Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) to a new all-time high of $2.14 trillion US dollars, according to preliminary figures from ETFGI’s Global ETF and ETP industry insights report for May 2013. There are now 4,849 ETFs and ETPs, with 9,875 listings, assets of $2.14 trillion, from 211 providers listed on 56 exchanges. ETF and ETP assets have increased by 9.6% from $1.95 trillion to $2.14 trillion.
ETFs and ETPs in May received $24.3 billion in net inflows. Equity ETFs and ETPs gathered the largest net inflows with $25 billion, followed by fixed income ETFs and ETPs with $3.1 billion, while commodity ETFs and ETPs experienced net outflows with $6.7 billion.
Equity ETFs and ETPs saw net inflows of $25 billion in May with US/North American equity exposures gathering $16 billion, the largest net inflows, followed by developed Asia Pacific equity with $8.9 billion, and global equity with $2.1 billion net inflows, while products offering emerging market equity exposure experienced the largest net outflows with $4.3 billion.
Fixed income ETFs and ETPs gathered net inflows of $3.1 billion in May and were composed of $2.2 billion of net inflows into corporate bond products, followed by Government bonds with $1.6 billion, while inflation linked ETFs/ETPs experienced the largest net outflows with $839 million.
Commodity ETFs and ETPs saw net outflows of $6.7 billion. Precious metals ETFs/ETPs experienced the majority of these outflows with $6.3 billion net outflows, of which $6.0 billion left products tracking gold.
In May Vanguard, Daiwa and SPDR ETFs received the largest net new assets with $4.5 billion, $4.4 billion and $4.4 billion in net inflows respectively, followed by Wisdom Tree with $3.1 billion net inflows.
“Net inflows into ETFs providing exposure to Japan during May elevated Daiwa and Wisdom Tree into the top 4 firms out of 211 ranked by net inflows” according to Deborah Fuhr, Managing Partner at ETFGI.
iShares remains the largest ETF and ETP provider with assets of $820 billion, reflecting 38.4% market share but ranked 5th in terms of net inflows in May with $2.4 billion; SPDRs is the second largest provider with $365 billion and 17.1% market share, followed by Vanguard with $290 billion and 13.6% market share. PowerShares is fourth placed with $74 billion and 3.5% market share, followed by db x-trackers/db ETCs with $69 billion. The top five ETF and ETP providers, out of 211, account for 76% of global ETF and ETP assets.
